UPDATE 1-Lebanon to stop paying all dollar Eurobonds, finance ministry says

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BEIRUT, March 23 (Reuters) - Lebanon will discontinue payments on all its foreign currency Eurobonds, the government said on Monday, as it seeks to devise a way out of the country’s crippling financial crisis.

The heavily indebted state suspended a $1.2 billion Eurobond repayment this month, declaring it could not repay debt with foreign currency reserves falling to “dangerous” levels.

It called for debt restructuring talks with creditors, opening a new phase in a crisis without precedent since Lebanon’s independence in 1943.

“The government has decided to discontinue payments on all its outstanding $US-denominated Eurobonds” as pressure mounts on “Lebanon’s access to foreign currency,” the finance ministry said in a statement on Monday.

The government “intends to engage in good faith negotiations as soon as possible” and the ministry will hold an investor presentation on March 27, it said.

Finance Minister Ghazi Wazni told Reuters earlier this month that initial contacts with creditors had started via the government’s financial adviser, U.S. investment bank Lazard, as Lebanon waited to see whether bondholders would cooperate or sue.

He also said the crisis plan would be ready in weeks and meet IMF advice.

Economy Minister Raoul Nehme told Reuters last week that the impact of the coronavirus may make harder to get help from foreign states and that Lebanon should consider IMF aid as one option. (Reporting by Eric Knecht and Ellen Francis; writing by Ellen Francis; editing by Larry King Editing by Catherine Evans)